As we approach the end of 2018, we are learning more about the 2017 Tax Cuts and Jobs Act regulations being issued, and the preliminary tax forms being issued by the IRS.
Actions to consider prior to the end of the year include the following:
- Make gifts to children, grandchildren or others. The annual exclusion for 2018 is $15,000 for individuals, and a married couple may gift $30,000.
- Bunch medical expenses in calendar years. For the year 2018, the Tax Act reduced the floor from 10% to 7.5% of adjusted gross income to allow medical expense deductions.
- Beware of the new “Kiddie Tax,” which requires a child to file a separate return if their wages exceed income of $12,000, their unearned income exceeds $1,050, or if both earned and unearned income exceeds the larger of $1,050 or $350 earned income.
- Bunch your charitable deductions in the same calendar year to exceed the new higher standard deduction, which is $24,000 for married couples and $12,000 for single individuals. Additionally, if you are over 70 ½ you may make a charitable donation as part of your required minimum distribution from an IRA account.
Happy Holidays to all of you, and best wishes for a prosperous 2019.